02.05.2024

Solid start for Herc

Herc Rentals in the USA has reported a decent start to the new year in terms of revenues and profit.

Total revenues for the three months to the end of March, were $804 million - up nine percent on the same quarter last year. Pre-tax profit increased eight percent to $81 million.

Capital expenditure on the rental fleet fell 45.5 percent to $181 million, compared to $332 million last year. At the same time disposals increased from $49 million to $61 million. The company says that it is still on track however to spend between $750 million and a $1billion for the full year. Currently the average age of the fleet is 47 months.

Net debt held stable at $3.7 billion.

Chief executive Larry Silber said: “We are off to a strong start in 2024, achieving record first quarter revenues and adjusted EBITDA margin as we continue to capitalise on key growth markets, like semiconductor, data centres, renewables and public infrastructure, while also investing in our network scale through greenfields and acquisitions, and elevating our higher-return specialty product lines. Once again, our teams are delivering for customers both in the local markets and at the national level, capitalising on our broad geographic coverage and strong demand for our products and services."

"We are making progress against each of our key 2024 priorities - enhancing our customer experience through our E3 business operating system, managing fleet efficiency and expenses with discipline, and scaling our network through greenfield locations and acquisitions in top 100 metropolitan markets. Based on this strong performance and current line of sight to market trends, we are affirming our annual performance targets, excluding Cinelease, of 7 to 10% year over year equipment rental revenue growth and adjusted EBITDA of $1.55 billion to $1.60 billion for 2024."

Vertikal Comment

This is a reasonable result from Herc, but it seems a little on the low side, given the number of acquisitions it has made over the last 12 months. The company has however, been making steady progress in terms of network and rental revenues. The fleet replacement programme however looks to have got off to a slow start, which is always a risk, while at 47 months the fleet is not exactly ancient, if it goes any higher it can potentially be costly for a company of this size, both in terms of callouts, maintenance, repairs and customers' impressions.

At the end of the day the company has some real momentum behind it now and is doing well, so we can but watch and see how the year develops.